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Nat’l Student Default Loan Rate Rises

Financial crisis likely to compound problem; C.U. rate below U.S. average

October 6, 2008 - 11:00pm
By Sam Zarnegar

The national student-loan default rate increased by 13 percent in 2006, leaving many concerned about the effects the current financial crisis will have on borrowers over the next two years.

The cohort default rate measured the number of borrowers who were due to enter repayment in 2006 but failed to make any payments on their loan, and defaulted after two fiscal years.

The rate, which was 4.6 percent in 2005, increased to 5.2 percent in 2006, according to a report released by the Department of Education in September.

With the meltdown of some of Wall Street’s largest investment banks and the current choked state of the credit market, the future of the student-loan default rate remains unclear.